Warrants, timing of Q3 results and thoughts on today’s #sThe warrants expire on June 19. Like all warrant holders, I need to decide between now and then if I should sell them or exercise them. In 2018, Q3 earnings were released on July 30. If they follow that same schedule this year, that date will be way past the date we need to decide on what to do with the warrants. Therefore, we will have to rely on other company announcements in the coming weeks. I therefore think the company is incented the release positive news between now and June.
As for the stock price action today, I am not surprised. Sales came in more or less as Greg predicted several months ago. The market priced those expectations into the SP long ago. The two big surprises for me in the #s were not in the sales but in the significant growth in SG&A expenses which led to the losses and the massive inventories they are carrying (this takes cash to fund). It appears to me the S,G&A expenses grew to accommodate much larger sales in the future. Simply put, they are building a foundation today for constructing the house in the future. It comes down to execution of sales strategy now. Inventories have grown to a staggering $95 mm. This represents more than 1 full year of cost of sales if you take the Q2 sales and annualized them. Also, I presume their inventories continue to grow! So they need significantly more sales in the future to support this level of inventories. I get it, some of these inventories will be used for the initial build of edibles. Regardless, they need to grow their sales significantly from where they are today to support the size of the organization they are building.
On a final note, I listened in on the conference call and I will give my perspective on the response provided to the question related to “are you uplisting to a larger exchange”. If they weren’t considering it, I think the answer would have been something like “we are currently pleased with our situation but will revisit in the future should conditions change”. There “no answer” to the question suggests to me they are actively looking at uplisting. It would be wonderful if they announced that well before the expiration of the warrants!
GLTA!